China's Ministry of Finance and a number of unnamed financial institutions are preparing to launch a RMB30 billion (US$4.4 billion) government guidance fund to support growth of the service trade, especially China exporting its services to foreign countries, according to Chinese state media reports.
The Ministry of Finance will contribute RMB5 billion (US$730 million) to the new fund, which marks the first guidance fund geared towards services, which refers to trading of intangible products such as tourism, financial services and telecommunication services.
The fund will seek to raise third-party private capital via the establishment of subsidiary funds, to reach a total of RMB30 billion.
According to the Ministry of Commerce, China’s imports and export of services reached RMB4.29 trillion during the first ten months of 2016, up 16% year-on-year. The country's total service trade increased to US$713 billion in 2015, from US$362 billion in 2010, representing an average annual growth rate of 14.5%.
However, China's service trade has long suffered from a structure imbalance, with the country consistently recording a trade deficit on services in past years. Tourism also plays a disproportionately dominant role in China's service exports, sometimes taking over 50% of total service exports.
"China accounts for only 6% of the total service trade globally, far less than the U.S.," said Li Jun, vice director at the research center of Ministry of Commerce. "Although tourism is the world's biggest service industry, there is no other country where tourism accounting for over 25% of its total services trade."
In the first ten months of 2016, China registered a service trade deficit of over US$200 billion, which is mainly attributable to the structural shift in consumer spending and growing demand for outbound tourism, higher education and health services, according to Chinese media reports.